Warning
Info
Warning
Info
Simple English definitions for legal terms
capitalize
Read a random definition: jus sanguinis
A quick definition of capitalize:
Capitalize: To turn money earned into money that can be used to grow a business. It can also mean to treat a cost as a long-term investment instead of a regular expense. Another meaning is to figure out how much money you will make in the future and how much it is worth now. Lastly, it can mean to give money to a business to help it grow.
A more thorough explanation:
Definition: To convert earnings into capital, treat a cost as a capital expenditure, determine the present value of long-term income, or supply capital for a business.
- When a company earns profits, it can choose to capitalize those earnings by reinvesting them into the business instead of distributing them as dividends to shareholders.
- If a business purchases a new building, it may choose to capitalize the cost of the building by treating it as a long-term asset rather than an expense that is deducted from revenue.
- An investor may capitalize the future income from a rental property by determining its present value and using that value to make investment decisions.
- A venture capitalist may choose to capitalize a startup by providing the necessary funding to get the business off the ground.
These examples illustrate the different ways in which earnings, costs, and income can be capitalized to benefit a business or investor. By converting earnings into capital, treating costs as assets, determining the present value of income, or supplying capital for a business, individuals and companies can make strategic decisions that help them achieve their financial goals.